The leaders of Britain’s banks have not done enough to change the culture of
the financial services industry five years on from the financial crisis,
according to the head of Tesco’s banking arm.

Benny Higgins, chief executive of Tesco Bank and a former head of retail banking at Royal Bank of Scotland, said senior managers need to do more to ensure customers are better served by lenders.

“The change will take place when the leadership of the providers is about being focused on what customers want and need, and I don’t think there has been a great deal of change so far. We are certainly focused on trying to do what we can,” said Mr Higgins in an interview.

The retailer is already a significant presence in the financial services industry as one of the country’s largest credit card companies, as well as the largest online provider of personal loans, while £1 in every £8 withdrawn in the UK is taken out of its cash machines.

Despite Tesco’s move to challenge the existing high street lenders, Mr Higgins said he did not think more banks was the solution to improving competition.

“More competitors isn’t necessarily a good thing. It will only change if the leadership of the organisations change the way they do business.

“Because if you have more competitors who behave in the same way nothing will change. The idea that you say, 'This is a problem, there are an inadequate number of competitors’, is flawed,” he said.

Tesco Bank was founded in 1997 and was originally a joint venture between Tesco and RBS, until Tesco bought out its banking partner in 2009 months after RBS was rescued by the taxpayer at a cost of £45.5bn.

Since taking full control, Tesco has abolished all individual sales targets for staff as well as bonuses, which Mr Higgins warned were “corrosive” for banking businesses.

“When we took over the business we removed all sales targets, we immediately removed all the incentives. We were under no pressure to do this. I took the view that incentives and targets are ineluctably corrosive. That single move has refocused people on focusing on the customers,” he said.